26 U.S.C. § 3132 — Payroll credit for paid family leave
submitted 5 years ago by Pub. L. 117-2 to r/title-26-INTERNAL-REVENUE-CODE · 2,140 words · no verdicts yet
An employer receives a quarterly credit equal to qualified family-leave wages, subject to per-day, aggregate, employment-tax, and other limits. The section sets rules for related expenses, collective-bargaining contributions, other credits and programs, and the credit's April 1 through September 30, 2021 period.
(a) For each calendar quarter, an employer may claim a credit against applicable employment* taxes equal to 100 percent of qualified family-leave wages paid for that quarter.
(b) (1) Counted wages, plus subsection (e) increases, may not exceed $200 for any day or part of a day and $12,000 in total for all quarters. (2) The quarterly credit may not exceed applicable employment taxes on all employee* wages, reduced by section 3131 credits. (3)(A) Any excess is an overpayment refundable under sections 6402(a) and 6413(b). (B) The credit must be advanced under the Secretary's forms and instructions up to the subsection (a) amount, subject to paragraph (1) and (2), calculated through the latest payroll period in the quarter.
(c) (1) "Qualified family-leave wages" means employer-paid wages that the Emergency Family and Medical Leave Expansion Act, including its amendments, would require if it applied after March 31, 2021. This section does not define the quoted term beyond that cross-reference. (2)(A) For deciding whether wages qualify, section 110(a)(2)(A) of the Family and Medical Leave Act must also cover leave reasons described in section 5102(a) of the Families First Coronavirus Response Act, and seeking or awaiting a COVID-19 test or diagnosis after exposure or employer request, or receiving COVID-19 immunization or recovering from an injury, disability, illness, or condition related to it. Section 110(b) must be applied without paragraph (1), with the quoted 10-day phrase removed from paragraph (2)(A), and with $12,000 replacing $10,000 in paragraph (2)(B)(ii). (B) If the employer fails any requirement of either cited Act for leave for a qualifying public-health-emergency need, the related amounts do not qualify. The time limit in section 102(a)(1)(F) of the Family and Medical Leave Act of 1994 is disregarded. An employer taking an action described in section 105 of the 1993 Act is treated as failing a requirement.
(d) The credit increases by qualified health-plan expenses properly allocated to the family-leave wages. Those are employer amounts to provide and maintain a section 5000(b)(1) group health plan, only to the extent excluded from employees' gross income under section 106(a). The Secretary* sets allocation rules; unless otherwise provided, proper allocation is pro rata among covered employees and by coverage periods relative to leave periods.
(e) The credit increases by properly allocated collectively bargained defined-benefit pension contributions and apprenticeship-program contributions. (2)(A) The pension-contribution term has the meaning in section 3131(e)(2). (B) For a quarter, its allocated amount is the hourly pension rate defined in section 3131(e)(2), multiplied by covered employees' hours for which family-leave wages were provided. (3)(A) The apprenticeship-contribution term has the meaning in section 3131(e)(3). (B) Its allocated amount is the hourly apprenticeship rate defined there multiplied by covered employees' hours for which family-leave wages were provided.
(f) (1) "Applicable employment taxes" means section 3111(b) taxes and the part of section 3221(a) taxes attributable to the section 3111(b) rate. (2) "Wages" means section 3121(a) wages ignoring section 3121(b)(1)-(22), and section 3231(e) compensation ignoring its paragraph (1) sentence beginning "Such term does not include remuneration". (3) The employer's chapter 1 gross income for the year containing the quarter's last day increases by the credit. Counted wages cannot also support credits under sections 45A, 45P, 45S, 51, 3131, or 3134; and this credit is reduced by any section 2301 CARES Act or section 41 credit attributable to the same wages. (4) An eligible employer may elect as prescribed not to count some wages. (5) No credit goes to the United States or its agency or instrumentality, except a section 501(c)(1) organization exempt under section 501(a). (6) Assessment of an amount attributable to a claimed credit cannot become time-barred before five years after the later of filing the original return containing the quarter or the date it is treated as filed under section 6501(b)(2). (7)(A) Wages counted as payroll costs for a covered Small Business Act loan, an Economic Aid Act section 324 grant, or an American Rescue Plan Act section 5003 restaurant grant are excluded. (B) The Secretary must say in guidance that covered-period payroll costs still qualify to the extent a covered loan is not forgiven because of a section 7(a)(37)(J) or 7A(g) decision; shared terms keep their meanings in those provisions.
(g) The Secretary must issue needed regulations or guidance to prevent avoidance of limits, reduce compliance and recordkeeping burdens, waive anticipated-deposit penalties, recapture later-adjusted credits, conform wages to required leave, advance credits, and govern allocation, reporting, and proof of collectively bargained contributions.
(h) This section applies only to wages paid April 1 through September 30, 2021. (i) The Secretary must waive a section 6656 deposit penalty when the failure resulted from anticipating this credit. (j) No credit is allowed if the employer discriminates in providing covered family leave in favor of highly compensated employees under section 414(q), full-time employees, or employees based on tenure.
In the case of an employer, there shall be allowed as a credit against applicable employment* taxes for each calendar quarter an amount equal to 100 percent of the qualified family leave wages paid by such employer with respect to such calendar quarter.
The amount of qualified family leave wages taken into account under subsection (a), plus any increases under subsection (e), with respect to any individual shall not exceed—
for any day (or portion thereof) for which the individual is paid qualified family leave wages, $200, and
in the aggregate with respect to all calendar quarters, $12,000.
The credit allowed by subsection (a) with respect to any calendar quarter shall not exceed the applicable employment taxes for such calendar quarter (reduced by any credits allowed under section 3131) on the wages paid with respect to the employment of all employees of the employer.
If the amount of the credit under subsection (a) exceeds the limitation of paragraph (2) for any calendar quarter, such excess shall be treated as an overpayment that shall be refunded under sections 6402(a) and 6413(b).
In anticipation of the credit, including the refundable portion under subparagraph (A), the credit shall be advanced, according to forms and instructions provided by the Secretary*, up to an amount calculated under subsection (a), subject to the limits under paragraph (1) and (2), all calculated through the end of the most recent payroll period in the quarter.
For purposes of this section, the term “qualified family leave wages” means wages paid by an employer which would be required to be paid by reason of the Emergency Family and Medical Leave Expansion Act (including the amendments made by such Act) as if such Act (and amendments made by such Act) applied after March 31, 2021.
For purposes of determining whether wages are qualified family leave wages under paragraph (1)—
section 110(a)(2)(A) of the Family and Medical Leave Act of 1993 shall be applied by inserting “or any reason for leave described in section 5102(a) of the Families First Coronavirus Response Act, or the employee* is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and such employee has been exposed to COVID–19 or the employee’s employer has requested such test or diagnosis, or the employee is obtaining immunization related to COVID–19 or recovering from any injury, disability, illness, or condition related to such immunization” after “public health emergency”, and
section 110(b) of such Act shall be applied—
without regard to paragraph (1) thereof,
by striking “after taking leave after such section for 10 days” in paragraph (2)(A) thereof, and
by substituting “$12,000” for “$10,000” in paragraph (2)(B)(ii) thereof.
For purposes of determining whether wages would be required to be paid under paragraph (1), if an employer fails to comply with any requirement of the Family and Medical Leave Act of 1993 or the Emergency Family and Medical Leave Expansion Act (determined without regard to any time limitation under section 102(a)(1)(F) of the Family and Medical Leave Act of 1994) 1 with respect to any leave provided for a qualifying need related to a public health emergency (as defined in section 110 of such Act, applied as described in subparagraph (A)(i)), amounts paid by such employer with respect to such leave shall not be taken into account as qualified family leave wages. For purposes of the preceding sentence, an employer which takes an action described in section 105 of the Family and Medical Leave Act of 1993 shall be treated as failing to meet a requirement of such Act.
The amount of the credit allowed under subsection (a) shall be increased by so much of the employer’s qualified health plan expenses as are properly allocable to the qualified family leave wages for which such credit is so allowed.
For purposes of this subsection, the term “qualified health plan expenses” means amounts paid or incurred by the employer to provide and maintain a group health plan (as defined in section 5000(b)(1)), but only to the extent that such amounts are excluded from the gross income of employees by reason of section 106(a).
For purposes of this section, qualified health plan expenses shall be allocated to qualified family leave wages in such manner as the Secretary may prescribe. Except as otherwise provided by the Secretary, such allocation shall be treated as properly made if made on the basis of being pro rata among covered employees and pro rata on the basis of periods of coverage (relative to the time periods of leave to which such wages relate).
The amount of the credit allowed under subsection (a) shall be increased by so much of the sum of—
so much of the employer’s collectively bargained defined benefit pension plan contributions as are properly allocable to the qualified family leave wages for which such credit is so allowed, plus
so much of the employer’s collectively bargained apprenticeship program contributions as are properly allocable to the qualified family leave wages for which such credit is so allowed.
For purposes of this subsection—
The term “collectively bargained defined benefit pension plan contributions” has the meaning given such term under section 3131(e)(2).
The amount of collectively bargained defined benefit pension plan contributions allocated to qualified family leave wages for any calendar quarter shall be the product of—
the pension contribution rate (as defined in section 3131(e)(2)), expressed as an hourly rate, and
the number of hours for which qualified family leave wages were provided to employees covered under the collective bargaining agreement described in section 3131(e)(2)(A)(iii) during the calendar quarter.
For purposes of this section—
The term “collectively bargained apprenticeship program contributions” has the meaning given such term under section 3131(e)(3).
For purposes of this section, the amount of collectively bargained apprenticeship program contributions allocated to qualified family leave wages for any calendar quarter shall be the product of—
the apprenticeship contribution rate (as defined in section 3131(e)(3)), expressed as an hourly rate, and
the number of hours for which qualified family leave wages were provided to employees covered under the collective bargaining agreement described in section 3131(e)(3)(A)(iii) during the calendar quarter.
For purposes of this section, the term “applicable employment taxes” means the following:
The taxes imposed under section 3111(b).
So much of the taxes imposed under section 3221(a) as are attributable to the rate in effect under section 3111(b).
For purposes of this section, the term “wages” means wages (as defined in section 3121(a), determined without regard to paragraphs (1) through (22) of section 3121(b)) and compensation (as defined in section 3231(e), determined without regard to the sentence in paragraph (1) thereof which begins “Such term does not include remuneration”).
For purposes of chapter 1, the gross income of the employer, for the taxable year* which includes the last day of any calendar quarter with respect to which a credit is allowed under this section, shall be increased by the amount of such credit. Any wages taken into account in determining the credit allowed under this section shall not be taken into account for purposes of determining the credit allowed under sections 45A, 45P, 45S, 51, 3131, and 3134. In the case of any credit allowed under section 2301 of the CARES Act or section 41 with respect to wages taken into account under this section, the credit allowed under this section shall be reduced by the portion of the credit allowed under such section 2301 or section 41 which is attributable to such wages.
This section shall not apply to so much of the qualified family leave wages paid by an eligible employer as such employer elects (at such time and in such manner as the Secretary may prescribe) to not take into account for purposes of this section.
No credit shall be allowed under this section to the Government of the United States or to any agency or instrumentality thereof. The preceding sentence shall not apply to any organization described in section 501(c)(1) and exempt from tax under section 501(a).
Notwithstanding section 6501, the limitation on the time period for the assessment of any amount attributable to a credit claimed under this section shall not expire before the date that is 5 years after the later of—
the date on which the original return which includes the calendar quarter with respect to which such credit is determined is filed, or
the date on which such return is treated as filed under section 6501(b)(2).
This section shall not apply to so much of the qualified family leave wages paid by an eligible employer as are taken into account as payroll costs in connection with—
a covered loan under section 7(a)(37) or 7A of the Small Business Act,
a grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, or
a restaurant revitalization grant under section 5003 of the American Rescue Plan Act of 2021.
The Secretary shall issue guidance providing that payroll costs paid during the covered period shall not fail to be treated as qualified family leave wages under this section by reason of subparagraph (A)(i) to the extent that—
a covered loan of the taxpayer* under section 7(a)(37) of the Small Business Act is not forgiven by reason of a decision under section 7(a)(37)(J) of such Act, or
a covered loan of the taxpayer under section 7A of the Small Business Act is not forgiven by reason of a decision under section 7A(g) of such Act.
Terms used in the preceding sentence which are also used in section 7A(g) or 7(a)(37)(J) of the Small Business Act shall, when applied in connection with either such section, have the same meaning as when used in such section, respectively.
The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including—
regulations or other guidance to prevent the avoidance of the purposes of the limitations under this section,
regulations or other guidance to minimize compliance and record-keeping burdens under this section,
regulations or other guidance providing for waiver of penalties for failure to deposit amounts in anticipation of the allowance of the credit allowed under this section,
regulations or other guidance for recapturing the benefit of credits determined under this section in cases where there is a subsequent adjustment to the credit determined under subsection (a),
regulations or other guidance to ensure that the wages taken into account under this section conform with the paid leave required to be provided under the Emergency Family and Medical Leave Expansion Act (including the amendments made by such Act),
regulations or other guidance to permit the advancement of the credit determined under subsection (a), and
regulations or other guidance with respect to the allocation, reporting, and substantiation of collectively bargained defined benefit pension plan contributions and collectively bargained apprenticeship program contributions.
This section shall apply only to wages paid with respect to the period beginning on April 1, 2021, and ending on September 30, 2021.
The Secretary shall waive any penalty under section 6656 for any failure to make a deposit of applicable employment taxes if the Secretary determines that such failure was due to the anticipation of the credit allowed under this section.
No credit shall be allowed under this section to any employer for any calendar quarter if such employer, with respect to the availability of the provision of qualified family leave wages to which this section otherwise applies for such calendar quarter, discriminates in favor of highly compensated employees (within the meaning of section 414(q)), full-time employees, or employees on the basis of employment tenure with such employer.
Source credit: (Added Pub. L. 117–2, title IX, § 9641(a), Mar. 11, 2021, 135 Stat. 166.)
- 2021Enacted · Pub. L. 117-2 · 135 Stat. 166
A history note hasn’t been published yet. The record shows enactment by Pub. L. 117-2 on 2021-03-11.
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